THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, SEPTEMBER 1, 1919. BRITISH RETRENCHMENT.

New Zealand Herald, Volume LVI, Issue 17253, 1 September 1919, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, SEPTEMBER 1, 1919. BRITISH RETRENCHMENT.

The British nation is applying itself to the task of financial reconstruction with a characteristic lack of self-pity. The public has become thoroughly alarmed by the failure of the Government to reduce expenditure to a peace basis as rapidly as was expected, and financial scandals are the topic of the hour. To such monumental examples of extravagance as the Slough motor depot the newspapers are daily adding others of greater or less magnitude, and the indictment against the Government has developed so irresistibly that Mr. Lloyd George has personally undertaken a campaign of retrenchment. All these are healthy symptoms. There is something hypnotic in the expenditure of millions. It is difficult to convince men who have seen money poured out like water that the reservoir is not inexhaustible, and in the care with which it is now reviewing the financial position the British public is giving fresh evidence of its strong native common sense. This is not the moment for sparing | either personal reputations or the national name, and the matter which is being published in English newspapers leans, and in the circum- : stances rightly leans, to sensationalism, and, perhaps, to overstatement. There have been inefficiency and gross waste in many branches of war effort, and much extravagance still remains to be checked. But, on the whole, the British administrative record during the war has been creditable, and there have been comparatively few great mistakes in organising policy. The disclosures now being made by the newspapers are instructive, but it is well to remember.-that they represent only one side of the picture and that they are ,penned during, a moment of self-depreciation. Yet it must be admitted that no efforts to promote economy can be too dramatic, and no remedies for extravagance can at the present time be too heroic. Little stands between any of the European belligerents and bankruptcy, and though Britain has many advantages over her neighbours, her position is not so' brilliant that she can afford to take any risks. The net result of the war has been to raise her national debt from £645,000,000 to £7,436,000,000, and by next year there will be a further increase off £245,000,000. Against this may be put as assets loans to Allies and Dominions of £1,895,840,000. The Chancellor of the Exchequer. Mr. Austen Chamberlain, estimates that the national expenditure in a normal year—which may not, however, be next year—will be £766,000,000. Before the war £200,000,000 Budgets were regarded with horror, and even in 1917-18 the revenue was smaller than that which is now regarded as the standard of the future. The real significance of the national debt, ,11 be better appreciated from the fact, that about half the revenue of the future will be absorbed in providing interest and sinking-fund Pensions will cost £50,000,000 and the expenses of civil government about £160,000.000. There remain only the army, navy, and air estimates, and any reductions which may br- effected in Mr. Chamberlain s figures will have to be made at their expense. Possiblv the development of the new international organisation will permit of tl is but there is nothing in the preseut outlook to encourage the hope that thforces may safely be retrenched One thing that is certain is that for many years Britain must carry a burden of taxation which in 1914 would scarcely have been deemed

possible. Even if production is increased to the Government would require to'' take over 20 per cent, of the national income. In the United States it is estimated that only 5 per cent, of the national income will he required by the taxcollector.

j • These figures are portentous enough, but they are not in themselves alarming. It is the delay in reaching a peace basis that is making the British taxpayer angry. For the current financial year there is an I estimated deficit of £233,810,000 to be made good by borrowing. It was hardly to be expected that the transition year could be tided over on revenue ; nevertheless there is a strong public suspicion that the expenditure is not falling as rapidly as it might. The overstuffing of departments is one complaint which has been mentioned in the cables. Ministers themselves have admitted that there is an unnecessary inflation of the public services, and Sir Alfred Mond, First Commissioner of Works, recently likened the demobilisation of departments to the task of Sisyphus. The situation calls for a national effort scarcely less intense and sustained than that which won the war. Only by public and private economy, by ceasing to borrow and commencing to pay back, can Britain restore her financial prestige, and the key to this is increased production. Fortunately there is evidence that all classes of the community now realise that prosperity depends on work and thrift, and that they are about to face realities with the same courage and determination as have carried them over all other crises in the national history.